Tanzania: How Tanzania Government Rescued Struggling Udart

Dar es Salaam — UDA Rapid Transit (Udart) managing director John Nguya has described the government decision to increase its stake in the bus operator was crucial considering the financial situation the company was facing.

In 2019, the government increased stake in Udart from 51 percent to 85 percent in a move to retake firms that it said were controversially privatised.

Mr Nguya said the bus company, which is the operator of the country's rapid transit since 2016, faced financial challenges following floods that damaged its buses.

He said, due to few buses being in operation, daily revenue from fare collection had dropped from between Sh115 million and Sh130 million when the firm started operations in 2016 to about Sh30 million in 2018.

However, after the government intervention including technical and financial support, the company "is now recovering with collection of fares reaching up to Sh94 million per day."

"As we were repairing the damaged buses, the floods hit us for the third time in 2018. This caused more damages to some other buses that were in good condition hence we had to use a big amount of money to buy spare parts for us to repair the damaged buses," said Mr Nguya in an interview.

Mr Nguya said that the floods caused a reduction of bus fare collection because not all buses were in operation.

He stressed 2018 was not a good year to the firm and Covid-19 made it even worse.

"The business situation was extremely bad because to maintain buses and at the same time to repay loans was difficult. I therefore dare to say if the government did not have quick intervention, the project would have collapsed because the fare collection was worse," he said.

"It was a good thing for the government to change ownership structure to provide technical backup in terms of leadership and finance," he said without quantifying the support.

He said the Bus Rapid Transit (BRT) has proved to be successful and residents are enjoying its services. He noted that sometimes people wait in a long queue for a long time because they know that the buses will come and they will be served.

Mr Nguya said public awareness and confidence are the most essential things they require for Udart to progress the project.

"As you know, the BRT services started as a pilot model and we are going into the sixth year. After operating on the pilot, we are now aware about the challenges and successes of the project."

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